Schedule L for Form 990/990-EZ - Transactions With Interested Persons
- Updated August 14, 2023 - 2.00 PM - Admin, Tax990
Read through this article to understand the purpose, filing requirements, and instructions for completing Schedule L.
Table of Contents
What is the purpose of Form 990/990-EZ Schedule L?
Schedule L is used to report details about financial transactions or arrangements between the organization and any disqualified persons under section 4958 or other interested persons.
It is also used to determine if a member of the organization's governing body is an independent member (for voting purposes described on Form 990, Part VI, line 1b).
Who must file Form 990/990-EZ Schedule L?
The table shown below describes the types of organizations that are required to complete the specific parts of Schedule L.
|Type of Organizations
|Answered “Yes” on
|Parts Required to be Completed
|Section 501(c)(3), 501(c)(4), or 501(c)(29) organizations
|Form 990, Part IV, line 25a or 25b (regarding excess benefit transactions)
|Schedule L, Part I
|Section 501(c)(3) or 501(c)(4) organizations
|Form 990-EZ, Part V, line 40b (regarding excess benefit transactions)
|Form 990, Part IV, line 26 (regarding loans)
|Form 990-EZ, Part V, line 38a (regarding loans)
|Form 990, Part IV, line 27 (regarding grants)
|Form 990, Part IV, line 28a, 28b, or 28c (regarding business transactions)
How to Complete Schedule L for Form 990/990-EZ?
There are 5 parts in Schedule L, and each part should be completed by the applicable organizations as described above.
Part I - Excess Benefit Transactions:
In this part, you are required to report details regarding the excess benefit transactions made to any disqualified persons under section 4958.
The details you must report are
- Name of disqualified person
- Relationship between disqualified person and organization
- Description of the transaction
- Whether the transaction has been corrected
Mention the amount of tax incurred by your organization managers or disqualified persons under section 4958.
Part II - Loans to and/or From Interested Persons
In this part, you must report details on loans including salary advances, payments made pursuant to a split-dollar life insurance arrangement (treated as loans), other advances, and receivables.
Only the outstanding loans between the organization and interested persons as of the end of your organization's tax year need to be reported.
The details you must report include
- Name of interested person
- Relationship with the organization
- Purpose of loan
- Loan to or from the organization
- Original principal amount
- Balance due
- Mention if the debtor is in default
- Approved by the board or committee
- Written agreement
Part III - Grants or Assistance Benefiting Interested Persons
Provide the required information about each grant or other assistance (including the provision of goods, services, or use of facilities) regardless of amount offered by the organization to any interested persons.
Provide the following details
- Name of interested person
- Relationship between an interested person and your organization
- Amount of assistance
- Type of assistance
- Purpose of assistance
Part IV - Business Transactions Involving Interested Persons
This part requires you to report details regarding the business transactions for which payments were made between your organization and interested persons during the corresponding tax year.
Reporting needs to be completed only for payments that meet the following criteria
- All payments made between your organization and the interested persons that exceed $100,000.
- All payments made from a single transaction between such parties that exceed the greater of $10,000 or 1% of your organization's total revenue for the tax year.
- Compensation payments made by your organization to a family member of a current or former officer, director, trustee, or key employee of your organization listed on Form 990, Part VII, Section A, that exceed $10,000.
- Your organization has invested $10,000 or more in the joint venture with an interesting person (whether or not during the tax year), and the profits or capital interest of your organization and of the interested person each exceeds 10% at some time during the tax year.
Part V - Supplemental Information
In this part, you can provide explanations required for some of the answers you provided in the previous parts. You can also use this space to report additional information regarding any other questions if you require.
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